Farm Bill Primer: Rural Development Title Provisions

Farm Bill Primer: Rural Development Title Provisions

April 10, 2017
Farm Bill Primer: Rural Development Title Provisions
Background
contiguous and adjacent to such a city or town. Eligibility
Omnibus farm bills are the major modern legislative vehicle
for some programs have statutory population limits much
for addressing many rural development issues. While other
less than 50,000 (e.g., Water and Waste Water loans and
legislation has significant implications for rural areas and
grants—10,000; Community Facilities—20,000). In
rural residents (e.g., transportation initiatives,
awarding loans and grants, regulations may also prioritize
environmental regulation, finance and taxation, Medicare,
rural areas with even smaller populations and/or household
Social Security), Congress has used periodic farm bills to
income limits.
address emerging rural issues as well as to reauthorize a
Existing Farm Bill Provisions
wide range of rural programs administered by the USDA’s
The rural development title of the 2014 farm bill generally
rural development mission agencies: Rural Utilities Service,
reauthorized or amended long-standing programs under the
Rural Business-Cooperative Service, and Rural Housing
ConAct and the Rural Electrification Act of 1936 (7 U.S.C.
Service. While the extent of overlap between federal
901 et seq.). New programs are also authorized under these
agencies and programs targeting rural areas has been of
statutes. A listing of selected programs is provided in the
concern to some rural policy observers, USDA Rural
text box.
Development has primary federal responsibility for rural
Concerns about how effectively USDA targets its rural
development and has the largest number of programs
development loan and grant assistance have been a
providing assistance to rural areas.
recurring consideration for policymakers and rural
development practitioners. The general concern is that rural
Since 1973, omnibus farm bills have included a rural
development funding may not be targeted as well or as
development title. How to create and support new
effectively as it could be. The 2014 farm bill directed
competitive advantage in rural areas so these areas can
USDA to begin collecting data regarding economic
better compete in a global economic environment is a key
activities created through its rural development grants and
issue framing current debates about the future of rural
loans and to measure the short- and long-term viability of
America. While the search for new sources of rural
award recipients. It also directed USDA to report to
economic development is part of the policy equation, also
Congress every two years on rural employment generation,
increasingly appreciated is the need to develop new
new business start-ups, and any increased local revenue.
approaches for federal assistance to rural areas that go
beyond the largely piecemeal programming that has long
Selected Rural Development (Title VI)
characterized rural economic development policy.
Provisions in the 2014 Farm Bill (P.L. 113-
79)
The rural development title of farm bills generally provides
Rural Business Development Grants. Combines two
assistance for rural business creation and expansion and
former programs—the Rural Business Enterprise Grant
rural infrastructure along with traditional assistance for
program and the Rural Business Opportunity Grant program
housing, electrical generation and transmission, broadband,
(§6015).
water and wastewater, and economic and institutional
Business and Industry Loan Guarantees. Provides loans
capacity in local communities. In the past several farm bills,
and loan guarantees. Includes a provision for locally or
policymakers have also supported innovative and
regionally produced agricultural food products that travel less
alternative business development (e.g., bioenergy, value-
than 400 miles between production and marketing (§6014).
added production, local food production) and innovative
Rural Energy Savings. Provides loans to utility districts and
mechanisms to finance it (e.g., the Rural Microentrepreneur
Rural Utility Service borrowers to assist rural households and
Assistance Program). Support for such alternative
small businesses in implementing durable, cost-effective energy
approaches is expected to continue as policymakers
efficiency measures (§6205).
recognize the great diversity among rural communities,
Rural Gigabit Network Pilot. Supports bringing ultra-high-
with some rural areas growing and prospering and others
speed broadband to rural areas. (§6105).
falling further behind as their primary industries (including
Essential Community Facilities Technical Assistance
agriculture) decline and population outmigration continues,
and Training. Provides public entities and nonprofit
particularly among younger, better educated residents.
corporations the technical assistance and training necessary to
prepare reports and surveys needed to request financial
What Is Rural?
assistance under the Community Facilities loan and grant
The 2002 farm bill (P.L. 107-171, Section 6020) amended
program (§6006).
the Consolidated Farm and Rural Development Act of
1972(the ConAct; 7 U.S.C. 1926 et seq.) to define rural and
rural area as any area other than a city or town with a
The 2014 farm bill authorized a new Strategic Economic
population of more than 50,000 and the urbanized area
and Community Development initiative to support
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Farm Bill Primer: Rural Development Title Provisions
economic development plans on a multi-jurisdictional basis,
on existing local and regional strengths. Developing a
giving priority to certain projects and reserving 10% of
regional entrepreneurial culture seems to be an important
available appropriations for community facilities, rural
approach in these efforts.
utilities, and rural business, among other types of
The mixed success of these and past efforts, as helpful to
operations. The bill created other rural development
rural areas as they may be, suggests to many rural
programs and/or modified or reauthorized other existing
development experts and policymakers that the current
programs. It authorized the Rural Energy Savings Program
structure of federal assistance to rural areas needs to be
to provide loans to utility districts and Rural Utility Service
reexamined. For example, regularly tweaking the definition
borrowers to assist rural households and small businesses in
of rural to determine eligibility for certain programs seems
implementing energy efficiency measures. It also
unlikely to produce significantly improved economic
authorized the Rural Business Development Grants
development outcomes. Some contend that greater
program, merging the general functions of two grant
emphasis on the socioeconomic relations between rural
programs—the Rural Business Enterprise and the Rural
communities and urban areas within a regional context
Business Opportunity grant programs—which were
could lay the foundation for more successful rural (and
terminated. It also reauthorized loans and loan guarantees
regional) development outcomes. While both the 2008 and
under the Business and Industry Guaranteed Loan Program
2014 farm bills provided a greater emphasis on regional
for locally or regionally produced agricultural food
efforts, some policymakers believe that redesigning existing
products—those products that travel less than 400 miles
programs to better target regional efforts could yield
between production and marketing—and targeted low-
positive results. To that end, the 2014 farm bill authorized a
income areas without access to fresh fruits and vegetables.
new data-collecting activity to assess the effectiveness of
Priority is given to projects benefitting underserved
federal development assistance to rural businesses and
communities (i.e., those with limited access to affordable,
required USDA to issue a report every two years.
healthy foods and with high rates of poverty or food
insecurity). Grants were also authorized to fund technical
Application processes for program loans and grants can be
assistance and training.
a barrier for many rural projects, especially those in
smaller, poorer rural areas. The way assistance is currently
In addition to these programs, the rural development title
provided (mostly through direct and guaranteed loans) has
includes other provisions to reauthorize and/or amend a
limitations because it is often driven by individual projects
wide variety of loan and grant programs that provide further
rather than integrated into an overall development strategy.
assistance in four key areas: (1) broadband and
Many rural communities may benefit from technical
telecommunications, (2) rural water and wastewater
assistance support for strategic planning. The Obama
infrastructure, (3) business and community development,
Administration identified interagency coordination among
and (4) regional development. Each of these programs has
federal agencies that target rural areas (e.g., Department of
authorized discretionary spending subject to annual
Housing and Urban Development, Department of Health
appropriations, with the exception of one mandatory
and Human Services) as in need of significant
spending authorization of $150 million for reducing the
improvement.
backlog of pending water and wastewater applications.
These are not so much new concerns about federal
The 2014 farm bill also modified the definition of rural area
assistance to rural areas as they are continuing issues
for the Housing Act of 1949. The provision increased the
identified by rural development experts and rural
maximum eligible population threshold to 35,000 from
policymakers. In the current budget environment, it may be
25,000 and permits any rural area that was eligible in the
difficult to advance substantively new approaches to rural
1990, 2000, and 2010 censuses to remain eligible for Rural
development in a new farm bill. However, with many in
Housing Service programs until the 2020 decennial census.
Congress concerned that current federal approaches to rural
development need to be reexamined and programs better
Issues and Options
targeted to overall development strategies, a new farm bill
Some policymakers contend that current farm policies,
is likely the major legislative vehicle to address these
which rely heavily on commodity support for a few
issues.
production sectors, play an ever smaller role in the vitality
of most rural areas. Rural manufacturing, which tends to be
Related CRS Reports
lower-skilled and lower-waged, continues to lose out to

CRS Report RL31837, An Overview of USDA Rural
foreign competition. While transformation to a service
Development Programs.
economy continues in rural America, service employment

CRS Report R43718, Rural Development Provisions in the
in many rural areas also tends to be in lower-wage personal
2014 Farm Bill (P.L. 113-79).
services rather than business and producer services.

Economic development efforts in some areas have targeted
entrepreneurial strategies and microenterprise development,
Tadlock Cowan, Analyst in Natural Resources and Rural
including new markets for value-added agricultural
products. Rather than simply seeking to attract relocating
Development
businesses, these approaches attempt to capitalize on a
IF10629
particular area’s distinctive social, economic, and
environmental assets and advantages to build endogenously
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Farm Bill Primer: Rural Development Title Provisions

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